This week, we’re going to start looking at the basics of how premiums are calculated and over the next couple of months; we’re going to see how these models become more complex and how what initially, seems like an easy task, isn’t quite so simple. The Basics of Insurance Premium Calculation Let’s say that you…

The concept of reinsurance is a relatively simple one. It enables an insurer to offset some of the risk on an individual policy or group of policies to another insurer. One of the main ways that reinsurers make money is through arbitrage. That’s the idea that you can bring together a group of risks and…

In some cases these two terms are used interchangeably. They are both designed to give an actuarial measure of the risk that an insurer faces on a policy. They are both commonly used with respect to real estate insurance and in particular to fire risks. Yet they are slightly different and you need to use…

This isn’t as complex as it might sound. Firstly; it’s probably a good idea to define what an actuarial reserve actually is. So: An actuarial reserve is used to account for the amount of money that an insurance company will be liable to pay (in the event of a claim) based on an estimate of…